Startups, Regulations, and Tech Colonization in India

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While the surplus population in India provides the right platform to the emerging entrepreneurs to brainstorm innovative ideas and disrupt the market, the GoI regulations restrict them to expand their horizons at the same time. Despite the fact that a host of angel investors and venture capitalists are investing huge sums of money on companies founded by twenty-something fresh college graduates, the entire startup ecosystem is bogged down by stringent regulations and compliance guidelines. To add more worries, even the old businesses are staging protests against these startups, alleging the latter of ruining traditional businesses. Admittedly, startups in India are grappling for survival, especially in an environment where every odd is against them. Take the example of Ashish Gurnani and Aashray Thatai, the co-founders of the New Delhi-based men’s apparel startup Postfold. Although the company has seen unprecedented growth over the two years, the co-founder duo is still apprehensive of venturing into new vistas. While they plan to move beyond apparel, the concern that both of them have is the not-so-friendly regulations imposed by the Government of India. Like any other young startup, Postfold is spending an inordinate amount of time in keeping track of the ever-evolving regulatory space. This, however, is not just a case study, it is the story of every startup. And those venturing into e-pharma or cryptocurrency are the major victims.

The Major Concerns

Unpredictability, many newfangled startup founders, say is the major drawback of the government regulations. For instance, the Supreme Court’s verdict on data privacy, which has been widely appreciated, was followed by RBI’s snap judgment on cryptocurrencies that has unnerved many startups. The lack of clarity from government’s end in conjunction with the constant accusation by local businesses of regulation disparity has placed every startup in an intricate maze.

“Startups like us spend a lot of time in determining what can be done and what’s not,” remarks Postfold’s founder Ashish Gurnani “For a young company, it can be a time-consuming and costly affair.”

In an environment like this, the growth that startups seek for becomes unattainable. Especially when it is combined with the compliance cost, the state of affairs is far away from cost-effectiveness. This is a primary reason why many startups have now resorted to conservative methodologies to navigate forward, thereby restricting themselves to optimize their full potential. The need of the hour is to formulate policies that conform to the best interest of the ecosystem and provide greater lead time for startups to adjust with the rapidly changing regulatory space.

Tech Colonization

One one hand startups are grappling with regulatory mandates, on the other many are of the opinion that technology giants are taking over the landscape and are running the show. This isn’t entirely a false accusation, considering the number of foreign companies India hosts. In fact, many ministers in the present cabinet opine that it is because of the unchecked proliferation of the Facebook’s and other behemoths, India has been forced into tech colonization. Despite the authenticity of such concerns, very little has been done to uplift the startup market in India. And is a primary reason why a big corporation hasn’t born out of India in years. While the lofty claims of providing a convivial environment for startups have failed, it is yet to be seen what accusations such as tech colonization yield in the long term.

What is the solution?

At this juncture of time, it is very difficult to even comment what a solution to this vexed conundrum can be. The government is under a lot of pressure and so are the startups. The need of the hour is to devise a solution that’s win-win for both. Now is the time to scale up and nurture the startup ecosystem that in the long run can negate concerns like tech colonization.